Richard Causey, Enron’s former top accountant, surrendered to the FBI last week after being indicted by a federal grand jury on charges that he helped to cook Enron’s books by creating financial schemes that hid losses, fabricated profits and eventually led to the collapse of America’s seventh largest company.

Causey pleaded not guilty before a U.S. District Court judge in Houston and was released on $1 million bond. His defense attorney, Mark Hulkower, called Causey a “decent, honorable and innocent man” that did “nothing, absolutely nothing, wrong.”

The indictment charges Causey with five counts of securities fraud and one count of conspiracy to commit securities fraud. If convicted, he faces a maximum sentence of 55 years in prison and a $5.3 million fine.

“Richard Causey and the other corrupt executives that ran Enron into the ground used some of the most sophisticated tricks in the corporate fraud playbook to con the public into believing that Enron was a success,” said Deputy Attorney General James B. Comey, who leads the president’s Corporate Fraud Task Force.

Causey’s arrest brings to 28 the total number of individuals involved in the Enron scandal that have been charged, including 20 former Enron executives. So far Enron’s former top two executives, Chairman Kenneth Lay and CEO Jeffery Skilling, still are not among them.

Ten Enron defendants to date have been convicted, including Enron’s former CFO, Andrew Fastow, and his wife, Lea Fastow, both of whom pleaded guilty two weeks ago. Andrew Fastow faces 10-years in prison and forfeiture of $23.8 million, and is permanently barred from serving as an officer or director of a public company. His wife pleaded guilty to one count of filing a false tax return. She was an assistant treasurer at Enron until 1997. In addition, the Justice Department’s Enron Task Force has retained more than $95 million in proceeds derived from criminal activity.

The Securities and Exchange Commission also filed civil charges against Causey last Thursday for fraud and demanded unspecified financial penalties. The indictment said Causey made at least $5 million on stock sales between 1999 and 2001 and earned more than $3 million in salary and bonuses over that period.

The Justice Department’s indictment describes how Causey, who was Enron’s chief accounting officer from 1998 until the end of 2001, Andrew Fastow and other Enron senior managers allegedly employed a variety of deceptive devices, ranging from use of improper financial structures to manipulation of reserve accounts and business segment reporting, to produce the appearance of 15-20% annual earnings increases on public financial statements in order to meet investment analysts’ expectations.

These devices included a series of fraudulent “hedging” structures known as the “Raptors” that formed the basis of guilty pleas of both Andrew Fastow and Glisan, the Justice Department said. The Raptors were designed to allow Enron to lock-in the values of many of its volatile, poorly performing and fraudulently inflated assets on its public financial reports, and to ensure that the company would not have to report expected future losses in the value of many of those assets.

Causey implemented the “Raptors” by allegedly entering, on behalf of Enron, into an improper and undisclosed side agreement with Fastow.

The SEC’s civil complaint last week alleges that Causey, along with others at Enron, manipulated Enron’s publicly reported earnings through fraudulent financial reporting of results from a variety of assets and operations, including the following: Enron’s merchant asset portfolio; off-balance-sheet special purpose entities; Enron’s retail energy business, Enron Energy Services; its broadband unit, Enron Broadband Services; and the reserves in its wholesale energy trading business.

Causey was fired in February 2002 after a special investigative report prepared for Enron’s board concluded that he failed to provide proper oversight on the company’s off-balance sheet partnership transactions. His firing came a week after he pleaded the Fifth Amendment when called to testify on Enron’s demise before a House of Representatives committee.

“The dominoes continue to fall as we expose the truth about the massive fraud at Enron,” said Assistant Attorney General Christopher A. Wray. “On the heels of guilty pleas by Enron’s former chief financial officer and treasurer, today’s indictment demonstrates that the same tried and true law enforcement methods that we use against drug cartels and organized crime families will also penetrate the most complex corporate fraud scheme.”

Enron, at one time the seventh-ranked company in the United States with its stock trading as high as $80 per share in August 1999, filed for bankruptcy protection on Dec. 2, 2001 and its stock became virtually worthless.

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